In a price comparison study of 400 items in 18 categories, Morgan Stanley analyst David Gober, who has an underweight rating on the home-furnishings retailer, said Amazon’s prices on average were 3% cheaper overall before coupons, shipping or taxes. While Bed Bath can easily offset that differential with its coupons, he found items $25 and above were 8% cheaper at Amazon before shipping costs but 20% cheaper when shipping costs are included.

That “effectively” erased the impact of the 20% off coupons for shoppers who want to get their products delivered, Gober said, adding Amazon appears to be “gaining momentum” in the category.

Amazon’s
/quotes/zigman/63011/quotes/nls/amznAMZN “price perception may be better than reality as well,” the analyst said. “While Bed Bath clearly remains competitive, it may need to continue to compress gross margins to stay ahead. Staying ahead can be costly.”

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